European Central Bank (ECB) policymaker Joachim Nagel reiterated on Wednesday that further significant rate hikes beyond March may be needed, as reported by Reuters.

Additional takeaways

"Favoring steeper reduction of APP portfolio from July."

"Rate cut talk non-starter until sufficient evidence of underlying inflation drop towards targets."

"Energy price drop has no essential bearing on ECB's medium term inflation projections."

"German inflation to average between 6% and 7% in 2023; rate could be well above 2% in both 2024 and 2025."

"Not expecting visible recovery until H2, full year GDP drop could be smaller than 0.5% December forecast."

"German economy to contract in Q1; gradual pick up from Q2 seen but no major improvement seen."

Market reaction

EUR/USD preserves its bullish momentum after these comments and was last seen rising 0.72% on the day at 1.0652.